State ownership and market orientation in China's public firms: An agency theory perspective

In China, an increasing number of state-owned firms have gone public, which suggests a dual-principal phenomenon such that firms are owned by both the government and non-state shareholders. Non-state shareholders tend to focus on the firm’s market orientation and performance, while state shareholders seek political goals over profit-maximization. This manuscript attempts to investigate this issue based on agency theory with both qualitative and quantitative studies. Our findings suggest that statecontrolled public firms indeed exhibit a lower degree of market orientation than privately controlled public firms in China, and that the firm’s market orientation is relatively high when firm ownership is concentrated in the hands of non-state shareholders. 2014 Elsevier Ltd. All rights reserved. * Corresponding author. Tel.: +86 10 6276 7444; fax: +86 10 6275 3590. E-mail addresses: [email protected] (J. Song), [email protected] (R. Wang), [email protected] (S.T. Cavusgil).